Adaptive Planning

For some time now, clients have been experiencing “burnout” with the traditional strategic planning process. As I have questioned them about their experience, the complaints are that it is too expensive and too time-consuming. But the expense and time commitment has not changed since organizations first started doing strategic planning. What has changed is the external environment. The external environment is changing so rapidly it’s hard to keep up. So to spend a lot of time and money producing a plan that maps out the next three to five years, and is based on the assumption that the external environment will not change substantially in that time period now feels like wasted effort.

The new focus in nonprofit management is building adaptive capacity – meaning the ability of the leadership to initiate and respond to change in a proactive manner. That is not easy. It requires embracing change as a learning opportunity, and it requires staying in touch with the larger context.

With my colleagues, I’ve been working on a new breed of strategic planning that we call Adaptive Planning. This borrows the best ideas from strategic planning (careful, targeted market research and organizational analysis) with principles of adaptive leadership (periodic, targeted re-examination of external context and willingness to shift strategies). We believe this is the best way for organizations to plan in a context of continual change. We work with our clients to create dashboards that help them monitor information about key facets of the external environment that could signal the need to shift strategies.

Why do Strategic Planning?

I recently wrote an article in my newsletter that helped me articulate why I love strategic planning so much.  At the end of a good planning process, you can be sure that no longer will you hear “because that’s the way we’ve always done it” as a rationalization for decisions or behaviors.  At its best, strategic planning is a carved-out time for the organization to enter the space where nothing is taken for granted – everything is up for grabs. 

What results from a healthy strategic planning process is not just a plan for the near future, but also a commitment (or recommitment) to the broadest directions and reasons for achieving the organization’s mission.  Strategic Planning is a supported, safe process, where everything is reexamined and the orgnization emerges in a more proactive state than before the planning process.  Directions and decisions are proactive, affirmative, and thoughtful. 

No longer can organizations afford to coast along on instinct, or past practice.  For an organization to remain sustainable in today’s rapidly changing environment, it must commit itself to periodic renewal, in the form of strategic planning. 

This is certainly true of us as individuals as well.  Seasons remind us to reflect and renew our approach to life, and make whatever adjustments are best for our general heatlh going forward.  It only makes sense that on a systemic level, we must also seek out seasons of reflection and renewal.

Hiring a Consultant

I recently had the opportunity to sit on the “other side of the table” and interview prospective strategic planning consultants for an organization on whose board I sit.  I learned a great deal from that experience about what makes a good consultant.  It is that rare combination of clarity (written proposal presents a clear process and scope), creativity (ability to envision different creative possibilities for managing the project), authority (being clear about what their expertise is) and deference (admitting what they don’t know).  

In this particular case, each of the consultants had very different proposals and approaches, yet each possessed these skills, making it a difficult choice!  We had tried to prepare as much as possible by drafting a set of criteria we would use to evaluate them, and drafting a set of questions to draw on in the interview.  In the end though, what was more important was having them start off by walking us through their process, which led us to the right questions to ask. 

In the interview, it is important for the consultant to answer questions clearly, be able to walk the organization through their proposed process succinctly and communicate some of their philosophy – the “why” behind their choices.  It is also important that the consultant listen carefully to the prospective client, and pick up on what they are saying.  Ultimately, the client wants to feel that the consultant has effectively “facilitated” the interview, as it gives them a sense of the consultant as a facilitator.

In this instance, we got a sense of facilitation skills from the way each consultant managed the interview conversation.  We also got a sense of personality traits – whether they listened well, answered clearly, had a sense of humor, etc. 

And of course, as unscientific as it can seem, a lot of the selection process comes down to chemistry.  In our meeting after the interviews, there was discussion about who would our board and staff work with best, whose style seemed like the best fit, who gave us the greatest confidence about the outcomes of our project.   All very hard to quantify or measure or compare, but nonetheless crucial to the decision-making process.

So when interviewing consultants keep three things in mind:

1. Prepare a good, clear RFP so you are comparing “apples to apples”
2. Read the proposals and interview candidates with an eye toward some of the traits outlined above.
3. Trust your instincts.

Good luck!

Introducing Adaptive Planning

Adaptive Planning is a new approach to planning that combines the best qualities of strategic planning with the important principles of adaptive leadership.  Some say strategic planning is a dying methodology.  Organizations invest half a year in a huge effort to gather information and create a plan that often feels irrelevant a year from when it is created.  So why invest all that time and money if the plan is going to have to change?

The reason this sentiment has been growing is that we are in a digital revolution.  Like the Industrial Revolution before it, the digital revolution is completely changing how we do business.  Our ability to get things done has hit warp speed, and the information we need to do our jobs is suddenly available whenever we want it.  As a result, the world is changing more rapidly than ever before – in fact, change feels exponential because of the viral nature of the internet and digital technology.

My colleagues and I have been giving this issue a lot of thought.  The frustration with the “old model” of strategic planning that we hear from our clients has caused us to step back and question ourselves.  Why do we think strategic planning is valuable?  In what ways is it no longer working?  How can we improve the process and product to make them more relevant to organizations?

Our answer is Adaptive Planning, a process that is:

• data-driven so decisions are based on good information;
• outward looking, takes into consideration the external context
• focus on the creation of long-term strategies and goals
• acknowledges the pace of change and includes a monitoring system for external factors on which strategies were based
• builds in a re-evaluation of strategies in one year, based on the monitoring of the external information
• ultimately builds the organization’s capacity to revise and redesign strategy when necessary

We’ve refined our planning process so it uses the talents inside the organization and, drawing on a coaching model, builds the capacity of those inside the organization to know how and when to shift strategies.

On Listening

In this cyber world of tweets, Facebook, LinkedIn, and blogs, we have become so concerned about developing messages to put out to the world, that we are forgetting the value of listening.  It’s hard to listen to tweets and posts and blogs.  A smart colleague once observed that even sending email is more like a monologue than a dialogue. 

If I was not able to listen to my clients I would be a failure at consulting.  Often, when I listen to clients’ needs, wants, history, it uncovers important clues I need to do the job at hand.  And sometimes, I hear things that make me change my course. 

We talk about the value of adaptive leadership, and a huge part of that is about listening.  Paying attention to what is going on outside your organization.  Not just being focused on your message, but allowing your message to reflect what you are hearing.

Metaphorically, this means that to be an effective leader, we must hone our ability to look outside ourselves for answers.  We have to know when to trust our internal voices and instincts, and when to tell them to “hold that thought,” while we listen to what others are saying before we issue an opinion.

Last but not least, listening is a gift to others.  Everyone wants to feel heard – it says you value them and what they are saying.  How do we know we are being heard if we are all about pushing messages out?

Thoughts on Adaptive Leadership

Our environment is in constant flux.  With the advent of social media, the concept of “real time” takes on a whole new meaning.  Change is instant, and it’s viral.  Consultants like me, whose business is to help organizations plan effectively, are thinking and talking about new models of planning that incorporate this focus on rapid change and adaptivity.  Some say the old strategic planning models are dying because they assume the external environment will be static for 3 years.  That has become a preposterous assumption.  Instead, there is an emerging focus on what it means to be adaptive leader – one who drives change and also seizes opportunities for change.  It describes a person who is both flexible and strategic. 

We scramble to stay ahead of this viral trend, but I had to laugh the other day as I came across this quote about Buddhism.  I guess our ideas aren’t new after all. 

“Buddhism holds that everything is in constant flux. Thus the question is whether we are to accept change passively and be swept away by it or whether we are to take the lead and create positive changes on our own initiative. While conservatism and self-protection might be likened to winter, night, and death, the spirit of pioneering and attempting to realize ideals evokes images of spring, morning, and birth.”

- Daisaku Ikeda, Japanese Buddhist and Peace Activist

What Will Capacity Building Look Like In This Decade?

I believe that capacity building will look different in the years ahead.  I’m not sure in what ways yet, but like all periods of upheaval, this one will generate new ways of understanding and improving how nonprofits fulfill their missions.  

The fiscal crisis of the 1970′s trimmed the nonprofit landscape, and what emerged was a renewed focus on individual giving as the best source of general operating support for organizations.  The 1980′s easy credit decade saw many nonprofits taking on debt to leverage their assets for growth.  Social entrepreneurship was also prominent in the 1980′s – all for the sake of growth, which became the holy grail in the nonprofit world as it did in the for profit world.  The 1990′s stock market boom generated so much easy spending that ironically, there emerged a strong emphasis on accountability and assessment (which only now is hitting the for-profit markets!).  So what will the next decade bring? 

Rather than waiting to see what the new developments will be, I want to ask my colleauges, clients, and fellow third sector participants for their input.  I am curious what is on your minds – what do you want to know right now?  If you run a nonprofit, what kind of information about your organization would be helpful for you to know more about?  Do you want an evaluation of your development function, an assessment of program viability, financial stability, board functioning, organizational culture?  If you are a consultant, what are you seeing across the field as emerging areas of focus or ways in which we can be helpful to nonprofits?  If you are a foundation, where do you see need emerging in the third sector?  How can we think together proactively about these questions and begin to shape what the next decade will generate? 

I invite you to check out my twitter page and respond to this feed so we can generate some useful dialogue around this issue and begin to shape the coming trends together through our collective thought leadership. 

Please visit me at @3dSector on Twitter and give me your comments, or feel free to submit longer comments here!

Need-Based Planning in Nonprofit Organizations

For the past twenty years, we have experienced a period of huge economic growth. The effect of that economic growth on the nonprofit sector has been a parallel growth in “capacity building” projects, such as strategic planning. Foundations realized that the nonprofit sector was growing and needed to improve its organizational capacity to keep pace with this growth, so they funded initiatives that built the internal capacity of the organization.

Jim Collins had a huge influence on the philosophy behind this internal capacity building. In Built to Last, he profiled for-profit companies that used what have traditionally been nonprofit practices, such as being mission-driven, to excel. Then in Good to Great he took for-profit ideas and applied them to nonprofits – such as “getting the right people on the bus” and “big, hairy, audacious goals.” No longer did nonprofits feel that altruism was the most sought after quality in terms of human resources. Getting the right people on the bus gave nonprofits permission to raise their salary structure to attract the right people, a legitimate focus on building organizational capacity through human resources.

Over the same period, ever increasing numbers of nonprofits engaged in strategic planning to improve their ability to serve their missions. They aligned themselves around a common vision of the future, and around their mission. They created programs that were responsive to the market in which they operated (funding streams, external market trends and forces, stakeholder expectations). They planned for growth that was organized around their core services. These have been important developments for the nonprofit field – they have improved and transformed the field into a truly professional enterprise.

But as the economy is in this state of depression, I find myself looking forward and wondering “what have we lost sight of?” Nonprofits have institutionalized “best practices” from the for-profit field, such as social entrepreneurship and strategic planning and developed their capacity to serve their missions. Somewhere along the way though, strategic planning became synonymous with growth planning and the for-profit concept that you must grow to survive. As I take stock of the opportunity for reflection this economic turmoil provides, I find myself genuinely wondering what the sector needs next?

I have come to realize that what we have lost sight of is need. Society draws a distinction between nonprofits and for profits around the concept that nonprofits exist to serve a societal need that is not being met, while for-profits exist to convince people that the product they have to sell is what the market wants to buy. However, nonprofits have begun to fall prey to that way of thinking too – they have begun to use superlatives “we have the best ….” “we are the leader in ….” “we serve more people …” Many of the strategic plans created in the past decade have lead to more staff, more professional approaches, more metrics … in short, growth.

If all businesses must grow to survive, then nonprofits are on a treadmill where they must continually improve efficiency and raise more money than ever before. This year’s gala has to be bigger and more profitable. We have to raise more money than we ever have. We have to make program delivery more efficient – have no unused space, raise enrollment numbers, etc. With the economy in decline, and services already at maximum capacity, we have found ourselves at a crisis point.

When nonprofits do strategic planning, do they really investigate and respond to need? How much time do they spend studying and assessing the state of need for their services? How often do they modify services to fit need, as opposed to modifying services so they can grow more? Need is often assumed, accurately, to be so large that there will always be unfilled need for a given nonprofit’s services. But perhaps what that reflects is insufficient focus within an area of need on a target group or geography that CAN be served.

The sector would be well served, at this juncture (having spent a decade strengthening and professionalizing itself), to invest in studies of the state of need and in analyses of smaller groups within areas of need that could potentially be served comprehensively. This is a culture shift for nonprofits, because it is as much a commitment to what they won’t do as it is to what they will do. Need is counter-cyclical – it diminishes in periods when we are able to raise more money, and increases in periods when less resources are available to serve that need. Rather than trying desperately to serve all the growing needs, might we be better off focusing on what we can accomplish so we understand more about what it means to be successful?

It is time to focus on redefining capacity building to suit our current context. A context where need is peaking, resources are low, and human capital is becoming more available. Where is the intersection of those factors and how can we grow capacity to meet the new state of need?

We have to get a clear and concrete understanding of what this new economy means for the state of need as a starting point to any kind of planning. Identify and target an area of need that where your organization can achieve some measure of success, then use that success as the baseline for the next target group. Once we understand the need for our services, and how to meet that need, we have to build our capacity to meet that need – prepare to hire very qualified people at competitive rates when your resources begin to rebound. Redefine our core program areas around our new understanding of need, and keep an eye on what the next need will be once you have succeeded in meeting the first one. Need should be the evolving definition around which everything else gets planned. With this frame of mind, need will no longer be seen as a never-ending treadmill, but as a set of incremental issues to be addressed, conquered and learned from.

Tips for Managing in Hard Times

Many of my clients are looking at strategies for managing their nonprofits during this recession.  The first wave of reactions was, in many cases, layoffs or furloughs.  Now that the dust has settled from the emergency response, there is a need to adjust the management mentality to a recession economy in other ways as well.  But this does not have to be such a “sobering” exercise.  Here are some suggestions for concrete ways in which you can use this period to position your organization for the inevitable economic recovery:

• Draw “bright lines” (as a colleague likes to say) around your most important programs.  Use the following criteria to focus and bolster those programs that are vital to your organization:
  • Is the program mission-critical (i.e. imperative to achieving your mission)?
  • Is the program profitable or break even?  If not, take a deep look at why not, and if it is not a necessary program look to bring it to a soft landing.
  • Ask your staff for input in this program analysis – they are on the front lines. 
  • Is the program still being funded?
• Focus on staff with an eye toward the future – now is a time to invest in your remaining staff.  They remain because they are among the most necessary and highly qualified.  Look at how they are being deployed.  Engage them in retreats to plan for the distribution of work in the near term, and most importantly to look at how their funcitonal areas may develop over time and what skills will be needed longer term.  This is your opportunity to think proactively about what additional staff you may need to add back longer term, and how to do that strategically.
• Engage with funders – so many nonprofits have lost funding, had funders close down, or been told to rotate out of funding cycles for a year.  For those funders who are still with you, call them!  Engage them by telling them what you are doing to manage during this recession.  Offer to work collaboratively with them to strengthen your organization or to participate in panels they might want to put together.  Fortify your relationships with those who have demonstrated their commitment to you by continuing to fund your work.
• Energize and activate your board beyond fund raising – just as this is a hard climate for you to fund raise, it is equally hard for your board members.  Don’t let them get discouraged.  Engage them with the organization in other ways – form task forces of board members to help you analyze programs, or to design staff development programs.  Keep them involved, sleeves rolled up, and active with the work that attracted them to your organization in the first place.  Utilize their expertise between board meetings.  You will need them as a resource for you now and going forward.
• Tightening your belt means you must compensate in other ways – don’t be afraid to walk around and chat with your employees.  Spend time asking them about what they are working on.  Thank them for their devotion during a difficult time (see my other blog on Maintaining Morale During Change).
• Be on the lookout for collaboration opportunities – perhaps you can collaborate with another organization to reduce the cost of providing services and therefore increase your program’s financial performance – but don’t stop there!  If you collaborate, tell people about it, most particularly your funders.  They will want to know that you are being creative about how to accomplish your mission more efficiently. 
• Communicate, communicate, communicate – transparency is more important now than ever before.  Managers are being forced to make very, very difficult choices.  Establish a system for making those choices that allows you to be totally transparent with your stakeholders.  And when your organization accomplishes something positive, share it with all your stakeholders.  The old adage still holds true – people are attracted to success.  Don’t miss any opportunity to tell your board, staff, funders and clients what you are doing and why. 

If you have other suggestions you would like me to add to future blogs, please comment!

Gross National Happiness in the Third Sector

As the economy profited in the last decade from mortgage backed securities and boundless Wall Street imagination, many nonprofits sought to put more business people (especially those with deep pockets) on their boards.  During the same decade, foundation funders became intensely interested in nonprofits being able to document their effectiveness.  The result has been a huge shift in both culture and practice toward measuring outcomes and bottom line mentality. 

Did the nonprofit sector need a dose of pragmatism?  YES!  But as often happens, the pendulum has swung too far to the opposite side from where the nonprofit field started.  Today, the nonprofit field is being held to the same standards as for-profit businesses - being a results-focused enterprise where profitability is key.  The problem is that the sector arose out of a need uniquely unfilled in a capitalist society by either business or government: the need for social programs aimed at those who fall between the cracks of enterprise and regulation.  This third sector market requires an equally third sector strategy and approach.  In other words, the rules of successful business only go so far in mission-driven organizations.  What they do not address is the importance of mission, and the perspective of filling unmet needs.

As a sector, we must get back to our roots, looking at how we can address the needs of those members of our society not served by capitalism or government.  Intriguing is the approach used by the King of Bhutan, who declared that instead of measuring Gross National Product, Bhutan would measure its success in terms of Gross National Happiness.  He looks at the same indicators: the economy, exports, market forces, but he looks at them through a different lens – are they creating systems that contribute to people’s happiness?  We have a lot to learn from that way of thinking.  Let’s jump off the bandwagon of social enterprise for a moment, and think about the Gross National Happiness of the people we serve.